Ritter Rotator Company: Special Order

The manufacturing capacity of Ritter Rotator Company's plant facility is 60,000 rotators per quarter. Operating results for the first quarter of 2009 are as follows:Sales (36,000 units @ RM10)RM360,000Less: Variable manufacturing and selling costs: 198,000, Contribution margin RM: 162,000, Fixed costs: 99,000, Operating income RM: 63,000A, foreign distributor has offered to buy 30,000 units at RM9 per unit during the second quarter of 2009. Domestic demand is expected to remain the same as in the first quarter.

Determine the impact on operating income if Ritter accepts this order. What other considerations are relevant in this decision? Assume that Ritter decides to run an extra shift so that it can accept the foreign order without foregoing sales to its regular domestic customers. The proposed extra shift would increase capacity by 25% and increase fixed costs by RM25,000. Determine the impact on operating income if Ritter operates the extra shift and accepts the export order. What other considerations are relevant in this decision?

Solution Summary

Your tutorial offers two computations of the incremental revenues and incremental costs of the special order. Five qualitative factors are mentioned for your review.

Brief Exercise 23-3
In Harley Company it costs $28 per unit ($17 variable and $11 fixed) to make a product that normally sells for $50. A foreign wholesaler offers to buy 4,100 units at $28 each. Harley will incur special shipping costs of $2 per unit. Assuming that Harley has excess operating capacity.
Indicate the net

Can I get some help to solve this please. Contact me if more credits are required.
Use the information below to determine the relationship between price and health status in this model. In other words, solve for D and for P, and set up two equations: one showing the value of D in terms of P; and one showing the value of P in

ABC Electronics manufactures Blue-Ray drive, which has a fixed manufacturing
overhead budget for year 20X3 of $2,000,000. The sales of Blue-Ray drive are expected to be
500,000 units for the year. All variable manufacturing costs are expected to be $8 per unit.
The company has budgeted $5,000,000 for selling and administra

SpecialOrder - Short Term Decisions
Consider a firm that has a capacity of 100,000 units. They cannot change this capacity in the short run. A potential customer has requested a specialorder of 10,000 units (one-time order) at a price of $24 each. There is no sales commission on this order since a sales rep was not invol

Hancock Hoodies is considering a specialorder for 100 hoodies for a local company party. The normal selling price of a hoodie is $30 and its unit production cost is $16 as shown below.
Direct materials $6
Direct labor $3
Manufacturing overhead $7
Unit product cost $16
Most of he manufacturing overhead is fixed and una

1) Consider the following information, prepared based on a capacity of 40,000 units:
Category Cost per Unit
Variable manufacturing costs $5.00
Fixed manufacturing costs $1.50
Variable marketing costs $1.00
Fixed marketing costs $0.50
Capacity cannot be added in the short run and the firm currently sells the product for